2025-01-31 19:18

Treaty signed in 1977 was amended by the US Senate in 1978 Presence of Chinese firms near the canal at center of dispute US officials say toll increases impact US disproportionately Jan 31 (Reuters) - Some U.S. lawmakers and officials are touting a nearly half-century-old treaty between the United States and Panama to justify the Trump administration's threat to reclaim the Panama Canal - provided it can show the strategic waterway's operation is under threat. Others, however, say hurdles would loom for any bid to use the 1977 Panama Canal Neutrality Treaty, which took effect in 1999 and guarantees that the canal would remain neutral and open to all ships from all countries, as a pretext for the U.S. to seize it. The 82-km (51-mile) waterway's construction was completed by the U.S. in 1914, and since its return to the Central American nation in 1999, it has been controlled by the Panama Canal Authority, an autonomous agency overseen by the Panamanian government. President Donald Trump vowed to take back the world's second largest interoceanic waterway during his Jan. 20 inauguration speech, falsely claiming that China is operating it. He has complained about the canal's tolls, as well as the presence of Chinese and Hong Kong-based firms in Panama. In a Senate hearing on Tuesday, Federal Maritime Commission (FMC) Chairman Louis Sola said the agency that oversees U.S. ocean transportation and its merchant marine would "consider broad reviews of Panama's maritime sector," and could impose fines and restrictions on Panamanian-flag vessels entering U.S. ports. More than 8,000 ships worldwide are flagged and registered by Panama. Ahead of this weekend's visit of U.S. Secretary of State Marco Rubio, Panama's President Jose Mulino on Thursday said he could not "negotiate and much less open a process of negotiation on the canal." "The canal belongs to Panama," he added. IS CHINA'S PRESENCE A THREAT? Besides stipulating that the canal "shall remain secure and open to peaceful transit by the vessels of all nations," the treaty also gives the U.S. the right to use its military to defend the canal, some U.S. officials and politicians say. In this week's hearing, U.S. Senator Ted Cruz said a new bridge over the canal being built by Chinese contractors, which he said could shut down transit, and the operation of ports on both ends of the waterway by China, constitute "acute" security risks. "Panama may well be in violation of this treaty," the Texas Republican said after listening to U.S. officials and experts. The $1.3 billion bridge, being built by a consortium between state-controlled firms China Communications Construction Company (601800.SS) , opens new tab and China Harbour Engineering Company, is expected to be completed by 2026 after delays and contract amendments. Hong Kong-based CK Hutchison Holdings (0001.HK) , opens new tab has operated the ports of Balboa and Cristobal for more than two decades. The publicly listed company is not financially tied to the Chinese government, though Hong Kong firms are subject to state oversight. "The presence of the Chinese government, Chinese companies, and especially Chinese state companies, but not limited to them, does raise serious issues and concerns for the neutrality of the treaty," George Mason University law professor Eugene Kontorovich, a research fellow at the conservative Heritage Foundation, said at the hearing. The automatic renewal of CK Hutchison's concession at the ports in 2021 sparked criticism in both the U.S. and Panama because of favorable financial terms for the firm. But no concerns were raised about security at the time. "Hutchison Port Holdings operates hundreds of ports around the world, including in the U.S... If these ports threaten U.S. security, why don't they terminate Hutchison's contracts in their country?" Julio Yao, one of Panama's advisors when it signed the neutrality treaty, wrote in a recent op-ed published in a local newspaper. "The U.S. cannot force Panama to review or terminate contracts with Chinese companies." Yao, a specialist in international relations, said arguments for an intervention are based on amendments in 1978 by the U.S. Senate to guarantee the U.S. defense of the canal against any threats. Panama should not recognize those amendments, he told Reuters. The eight-paragraph treaty and its annexes do not include a provision over the resolution of disputes or an expiration date. DO HIGHER CANAL TOLLS VIOLATE NEUTRALITY? Some U.S. officials have also asserted that an increase in passage fees by the Panama Canal in recent years "disproportionately affects Americans." Over three-quarters of all vessels passing through the canal originate in or are bound for the U.S., but the canal's tolling system does not differentiate by flag, origin or destination. In the fiscal year that ended in September, the canal reported a 5% decline in its toll revenue to $3.18 billion following a severe drought. But between 2020 and 2023, the canal's toll revenue had increased almost 26%, its annual reports showed. However, the canal's fee structure is based on reservations by type of vessel and size, combined with auctions for ships arriving without reservations and a variable water surcharge. Military vessels from any nation are subject to tolls different from commercial vessels. U.S. military ships have priority of passage. The treaty only states that "tolls and other charges for transit and ancillary services shall be just, reasonable, equitable and consistent with the principles of international law." The U.S. is disproportionately affected by canal fee raises mainly "because the U.S. disproportionately utilizes it," commissioner Daniel Maffei from the FMC said at the hearing. "We know it is a critical trade corridor, and want to continue to use that corridor and be treated in a fair way," he added. Toll increases have been applied not only by Panama but by other waterways in recent years, including the Suez Canal, amid demand spikes, geopolitical conflicts and adverse weather conditions worsened by climate change, shipping experts have warned. "The U.S. no longer operates a fleet of commercial vessels. Less than 10% of all cargo arriving or leaving the U.S. in the 60s were American-flagged. Now it is 1.5%," said former U.S. ambassador to Panama, John Feeley, in a TV interview last week, adding that Panama's toll raise has mainly been triggered by its use of freshwater, equally affecting all ships. Sign up here. https://www.reuters.com/world/americas/can-us-declare-chinas-presence-violates-panama-neutrality-treaty-2025-01-31/

2025-01-31 16:10

LISBON, Jan 31 (Reuters) - U.S. private equity firm Lone Star has told the Portuguese government that it is likely to sell a 25-30% stake in Novo Banco via an initial public offering, rather than seek a full sale, Finance Minister Joaquim Miranda Sarmento said on Friday. In September, three sources with knowledge of the matter told Reuters that Lone Star, which owns 75% of Novo Banco, was considering a full sale as well as weighing an IPO. The sources said Novo Banco was worth about 5 billion euros ($5.2 billion). Novo Banco, Portugal's fourth largest bank, was created in 2014 from the Portuguese government's bailout of collapsed private bank Banco Espirito Santo. Lone Star has owned its stake since 2017, with Portugal's resolution fund and the state owning the rest. Miranda Sarmento said the government had been told by Novo Banco and Lone Star that the U.S. private equity firm wanted to carry out "an IPO of around 25% to 30% of the capital" of the bank. He said the government "has never been informed that Lone Star is selling its entire 75% stake in the bank". Novo Banco declined to comment. A request for comment has been emailed to Lone Star. Although the top five Portuguese banks control more than 80% of the country's banking assets, analysts see room for further consolidation to improve competitiveness. The board of Novo Banco, however, says the bank would be better off as a standalone lender. In June, state-owned Caixa Geral de Depositos (CGD) CEO Paulo Macedo said the country's largest bank was considering "all the hypotheses" to buy another lender to preserve its market leadership in the face of expanding foreign banks, particularly from Portugal's larger neighbour Spain. "If CGD decides to evaluate what the market conditions and what future developments may be, the government will then make decisions based on this evaluation, but we will not interfere in the management of CGD," Miranda Sarmento told reporters. The other top banks in the country include Millennium bcp (BCP.LS) , opens new tab, Santander Portugal (SAN.MC) , opens new tab, which is owned by Spanish giant Santander, and BPI, owned by Spain's CaixaBank (CABK.MC) , opens new tab. ($1 = 0.9626 euros) Sign up here. https://www.reuters.com/business/finance/portugal-says-novo-banco-ipo-likely-be-stake-up-30-2025-01-31/

2025-01-31 16:04

OTTAWA, Jan 31 (Reuters) - Canada recorded a slightly higher C$22.72 billion ($15.66 billion) budget deficit for the first eight months of the 2024/25 fiscal year compared to the previous year-ago period as government expenditures grew faster than revenues, the finance ministry said on Friday. The 2023/24 April-November deficit was C$19.14 billion, it said in a statement. Program expenses over the eight months rose 11.3% on increases across all major categories of spending. Public debt charges increased by 17.4% largely due to higher interest rates on outstanding bonds and an increase in the total number of debt instruments, the ministry said. Year-to-date revenues grew by 10.5% primarily due to higher tax reveneus. On a monthly basis, Canada posted a deficit of C$8.21 billion in November, more than double the C$4.01 billion deficit posted in November 2023. ($1 = 1.4512 Canadian dollars) ((Reuters Ottawa bureau; [email protected] , opens new tab)) Keywords: CANADA BUDGET/ Sign up here. https://www.reuters.com/world/americas/canada-budget-deficit-over-first-eight-months-202425-jumps-c2272-bln-2025-01-31/

2025-01-31 16:03

Jan 31 (Reuters) - Bankrupt crypto exchange FTX said on Friday it had resolved a lawsuit it brought last year against K5 Global, a venture capital firm co-founded by a former aide in Hillary Clinton's office. The settlement will pave the way for the parties to collaborate to maximize recoveries for FTX customers and stakeholders, the companies said. The crypto exchange's dramatic collapse in November 2022 left many customers unable to access their funds. It was cleared to start repaying customers after a court approved its bankruptcy plan in October. "It is clear that K5 is a bright spot in the FTX portfolio, and the expected strong performance of their investments will be a key driver in the recovery efforts for our stakeholders," said FTX CEO John Ray, who has been spearheading an initiative to reclaim funds since the exchange's bankruptcy. K5 was co-founded by Michael Kives and Bryan Baum. Kives worked in Clinton's D.C. office as an aide to chief of staff Huma Abedin, while Baum is an angel investor who has backed a slew of companies including Uber (UBER.N) , opens new tab and Airbnb (ABNB.O) , opens new tab, according to the firm's website. The lawsuit against K5 was brought in June, in which FTX sought to claw back $700 million in investments that it alleged were made with misappropriated funds. Former FTX CEO Sam Bankman-Fried authorized the transfer of the funds to K5 entities and leaned on the firm's celebrity and business connections in his effort to obtain rescue financing in the days before FTX went bankrupt, according to the lawsuit. Bankman-Fried was sentenced to 25 years in prison in March last year. Sign up here. https://www.reuters.com/technology/ftx-reaches-settlement-with-ex-clinton-aides-investment-firm-2025-01-31/

2025-01-31 15:59

Jan 31 (Reuters) - Chicago Federal Reserve President Austan Goolsbee said inflation data released on Friday was a bit better than expected and gives him comfort that inflation is on path to the 2% target, adding that he still expects the U.S. central bank's policy rate to be "a fair bit" lower in 12 to 18 months. Goolsbee told CNBC, however, that "there is a question mark that is coming from policy uncertainty," including over the impact of tariffs that President Donald Trump says he will impose on trading partners like Mexico and Canada as soon as Saturday. "If it affects prices, it affects us ... our signal is getting a little muddied, when things are happening that drive up prices." Goolsbee said he agrees with Fed Chair Jerome Powell, who on Wednesday said there should be "no hurry" in making further cuts, given the need to see more progress on inflation. Powell spoke after the central bank announced it had left its benchmark interest rate in the current 4.25%-4.50% range. While tariffs theoretically impose a one-time increase on prices that doesn't necessarily require a policy response, Goolsbee said, "the difficulty we're going to have here, in this near period, is if collectively policy is going to be raising prices, we're going to have to figure out which part of the inflation is the part that monetary policy should look through and which part is a sign of the economy." Goolsbee, whose regional Fed bank keeps a close eye on the Midwest region including Detroit, said auto executives tell him they're concerned about what tariffs might do to their prices or profit margins. "And we do have to work these through before we can express confidence on where we are on the underlying economy," Goolsbee said. Sign up here. https://www.reuters.com/markets/us/feds-goolsbee-says-he-likes-inflation-data-cites-policy-uncertainties-2025-01-31/

2025-01-31 15:14

Brazil jobless rate in 2024 lowest ever recorded Unemployment in the quarter slightly above market expectations Cenbank keeps tightening stance amid inflationary concerns SAO PAULO, Jan 31 (Reuters) - Brazil's jobless rate came in slightly above market expectations in the final quarter of 2024 but reached its lowest yearly average for the current data series after the labor market showed continued resilience throughout last year. Unemployment in Latin America's largest economy hit 6.2% in the three months through December, statistics agency IBGE said on Friday, up from 6.1% in the previous rolling quarter and above the 6.1% expected in a Reuters poll of economists. The average unemployment rate in 2024, however, was 6.6%, the lowest level since the beginning of the data series in 2012. Brazil's jobless rate has been hovering around historically low levels for the past few quarters, an indicator cheered by the government but that has contributed to the central bank hiking interest rates. "In our view, the job market will remain heated and Brazil is expected to maintain an unemployment rate close to 6% at the end of this year and the next - a very low level by our historical standards," C6 Bank economist Claudia Moreno said. The strong job market with high wages has supported economic growth, fueling the consumption of goods and services, but triggered inflationary concerns as consumer prices remain above the central bank's 3% target. On Wednesday, the monetary authority raised interest rates by 100 basis points to 13.25% and kept its guidance for another hike of that size in March, leaving the door open for subsequent moves. Despite the slightly higher-than-expected jobless rate in the fourth quarter, adding to separate data that on Thursday showed that Brazil created fewer formal jobs than forecast in December, the bank's stance should not change in the short term. "It is too early to talk about a significant slowdown in the labor market to ease the inflation scenario and monetary policy," Galapagos Capital chief economist Tatiana Pinheiro said. "We maintain our forecast that the central bank will carry out an accelerated monetary tightening cycle, with a 100-basis-point hike in March and a 75-basis-point one in May, taking the Selic rate to 15%." Sign up here. https://www.reuters.com/world/americas/brazils-jobless-rate-hits-lowest-yearly-average-ever-2024-2025-01-31/